Norm Miller - President and CEO Mike Poppe - EVP and COO Tom Moran - EVP and CFO

Peter Keith - Piper Jaffray John A. Baugh - Stifel, Nicolas & Company, Inc. Brad Thomas - KeyBanc Capital Markets, Inc. Dan Farrell - Oppenheimer & Co. Inc. Nicholas Zangler - Stephens Inc. David Magee - SunTrust Robinson Humphrey

Good morning and thank you for holding. Welcome the Conn’s Incorporated Conference Call to discuss the earnings for the Quarter Ended October 31, 2015. My name is Kelly and I will be your operator today. During the presentation all participants will be in a listen-only mode. After the speakers’ remarks you will be invited to participate in the question-and-answer session. As a reminder this conference call is being recorded. The company’s earnings release dated December 8, 2015 distributed before the market open this morning and slides that will be referenced during today’s conference call can be accessed via the company’s Investor Relations website at ir.conns.com. I must remind you that some of the statements made in this call forward-looking statements within the meaning of the Securities and Exchange act of 1934. These forward-looking statements represent the company’s present expectations or beliefs concerning future events. The company cautions that such statements are necessarily based on certain assumptions, which are subject to risks and uncertainties, which could cause actual results to differ materially from those indicated today. Your speakers today are Norm Miller, the company’s CEO; Mike Poppe, the company’s COO; and Tom Moran, the company’s CFO. I would now like to turn the conference call over to Mr. Millar. Please go ahead, sir.

Good morning and welcome to Conn’s third quarter fiscal 2016 earnings conference call. I’ll begin the call with an overview and then Mike will discuss our retail and credit performance for the quarter. Tom Moran will complete our prepared remarks with additional comments on the financial results and our balance sheet. The key points of my comments are highlighted on slide two in the earnings call presentation. Since this is my first call since joining Conn’s, let me just a moment to speak why I joined the company. First, I was impressed with the knowledge and passion of the Board of Directors. They are truly engaged and committed for the long-term success of the company. Next, we have a distinctive business model based on delivering a unique value proposition that provides access to quality goods for the home to a growing population of underserved customers. The unique synergy of Conn’s retail and credit businesses gives us the competitive advantage in the marketplace. Conn’s have a long enriched history serving its customers and I was proud to be a part of the company’s recent 125th anniversary celebration in Beaumont, Texas where the company was founded. Next, let me take a minute to discuss what I found when I joined the company. Thanks to the work of our prior CEO Theo Wright and the leadership team I found the solid long-term strategic plan and many aspects of this plan will continue to service as a foundation moving forward. I found a passionate workforce that cares deeply about our customers and the long-term success of the company. We have all seen companies in the past underperform even with great strategies, what is critical now for our team is how we execute. With the strong foundation in place it is the team’s responsibility to execute. It is in the details of execution where most value creation takes place. While we do not deliver the results we would have like this quarter I am pleased with the progress we’re making to improve trends in the business. Our strategy to drive the furniture and mattress business is paying off, with increased sales in each category and is driving retail gross margin expansion on the sales mix shift. As a reminder, our longer-term goal is for furniture and mattresses to deliver 45% of our product sales. Slide three shows that we are making progress towards that goal increasing from 31% last year to 36% this year. Also of note, our stores opened in the past few years have delivered a 43% furniture and mattress sales mix during the quarter. During November we made enhancements to our marketing strategies, which are driving strong credit application growth. This helped us to achieve a high-teens percent increase in written sales over the Thanks Giving holiday and excluding the categories that we made a strategic decision to exit earlier this year drove same-store sales growth for the month of November to 8%. Similar to other retailers we are seeing sales activity concentrate around holiday promotional period contributing to the acceleration of our sales pace during November. This is consistent with what we experienced around the Labor Day holiday as well. For the remainder of the fourth quarter we expect flat to low single-digit same-store sales. We’ve previously communicated a long-term retail gross margin goal of 42%. We have continued delivering year-over-year improvements and this goal was achievable considering the following. Decreasing share of revenues from lower margins, small electronics and home office, increasing sales of furniture and mattresses, which have a higher margin, increasing sales of appliances and improving warehouse utilization. From a credit perspective, the investments we are making to enhance our underwriting are beginning to deliver benefits with the first phase of the installation of our early pay default scoring model implemented during the month of November. Our team is very engaged to provide more enhancements in the early part of next year. We realized the importance of maintaining an appropriate balance between retail growth and credit risk in the business and these ongoing actions help support that objective. More broadly we also delivered on a number of strategic objectives during this quarter that position us to execute our growth strategies while reducing risks and enhancing shareholder value. As part of an initiative to diversify our capital structure we re-entered the ABS market completing a securitization of $1.4 billion of receivables. We completed this transaction knowing our cost of borrowing would increase temporarily in order to gain access to this important source of liquidity and capital to support our long-term strategic plan. Additionally as expected the residual delivered $7.6 million of cash flow by the third month and we expect to receive a meaningful residual payment this month based on November performance. We plan to execute periodic securitizations of future originated receivables and the company intent to continue to originate and service these receivables going forward. For now, we expect to retain the residual equity in these transactions given our solid liquidity position and strong returns provided by these assets. We will however continue to monitor the market for residuals and will consider selling the residuals in the future. In conjunction with this transaction we also completed an amendment an expansion of our bank facility, which underscores our lenders’ confidence in our business model and gives us the flexibility to continue to execute securitizations in the future. These transactions along with our outstanding senior notes gives us multiple sources of capital and greater flexibility to execute our business plan. As part of Conn’s commitment to enhance the long-term shareholder value during the quarter and through yesterday we repurchased 5.2 million of our outstanding shares returning $132 million to shareholders. We believe the repurchase program underscores our confidence in our long-term growth prospects. We also continue to execute our plans to deliver continued growth. During the quarter, we opened six new stores including our 100th store in Las Vegas. As we expand our focus is to build out existing markets so that we maximize profitability by gaining efficiencies and marketing and distribution as quickly as possible. All of our new stores are in the Conn’s home plus format, which supports our expanded furniture and mattress assortment. The company has added many talented individuals to the organization over the past few years and has started making the investments needed to support an ever growing footprint. We are continuing to assess opportunities to improve our customers’ experience, expand margins and improve portfolio performance to deliver consistent, predictable results. Now I will turn the call over to Mike.

Thank you, Norm. Starting with our retail performance, same store sales excluding the exited categories of tablet, gaming equipment and cameras was up 3.8% for the quarter driven by furniture and mattresses, strengthen in furniture and mattresses, consumer electronics and home office products was partially offset by softness in home appliance sales. Additionally performance in our energy impacted markets stabilized in November. As we show on slide four of the earnings deck, total sales growth for the quarter was driven by furniture and mattresses up 21.8% and home appliances up 4.4% these are also our two highest margin product categories. In addition revenue from repair service agreements were up 12.9% due to increased retrospective commissions, product sales and mix driven higher average selling prices of these agreements. On the other hand, we experienced sales declines from categories where we made the strategic decision to exit certain products including tablets, which are part of home office and video game products and digital cameras, which are part of consumer electronics. Same store sales on a year-to-date basis are up 1% in line with our full year guidance. Retail gross margin increased over the prior year due primarily to the increased proportion of sales from furniture and mattresses as noted by the increased percentage of product sales and gross profit contributed by these categories on slide four. Slide five in the presentation recaps product gross margins, which were up 70 basis points as a percentage of product revenue due to the favourable product sales mix shift towards our higher margin furniture and mattress categories. We saw margin rate decline in home appliances on a shift in the timing of vendor funds. Consumer electronics margin rates improved during the quarter benefiting from a sales mix shift to higher end TVs, which provide higher margins and the eliminating low margin gaming equipment and digital cameras. Year-to-date our retail gross margin is 41.5% we are on track to achieve our margin guidance for the year. From a marketing perspective in late October we introduced a new TV campaign that has helped drive increased application and sales volume. After a small decrease in the third quarter November application volume was up 10%. Additionally in November we expanded the implementation of the furniture marketing plan we were previously testing to all major markets. Lastly, we had a different grand opening strategy this year compared to the prior year. You will recall from previous discussions that we now give the store associates roughly three months to prepare for the increased volume created by the grand opening campaign. Inventory increased year-over-year as we expanded our assortment and in stock levels for furniture in addition to building inventory for the first fourth quarter selling season. We are comfortable that our sales and purchasing plans will bring inventory inline early in fiscal 2017 without impacting margins. During the quarter we opened six new stores in our Arizona, Nevada and North Carolina markets. At this point we anticipate opening one more store before the end of the year bringing us to a total of 15 stores within the range of our guidance for the year. We have three new stores that will open in early February to kick off our plan to open 20 to 25 new stores next year. Turning to our credit operations. On slide six is the average FICO score of the portfolio over the last five years. The portfolio had been in a narrow range of credit scores and remained there last quarter. The FICO score of all originations in Q3 of fiscal 2016 was 613 compared to 608 in Q3 of the prior year. As Norm noted we implemented the first stage of our early paid default underwriting strategy its impact will be felt beginning in the fourth quarter. This custom scoring was developed with support from FICO and is designed to further segment the application data to identify customers at a higher likelihood to charge off after making two or fewer payments. Additionally, we implemented changes to reduce originations to higher loss potential [indiscernible] customers. Our early estimate of the impact of these two changes is a 1.5% reduction in sales and a 25 basis point reduction in the net static loss rate. We are under way developing the next generation of our underwriting score card and expect to implement it in the first half of next year. As with the early pay default scoring process, the goal is to provide enhanced segmentation of the application population to allow us to more precisely isolate low performing segments of the population and equally importantly identify additional profitable customers to approve. Slower portfolio growth is benefiting the underlying performance of the portfolio, but has a negative effect on reported delinquency and charge-off rates. Fourth quarter of fiscal 2016 delinquency is expected to decrease seasonally. November greater than 60 day delinquency was down from October to 10.1%, if the portfolio had grown at the same pace in the third quarter as it did in the prior year the 60 plus delinquency rate would have been 30 basis points lower than reported this year. As a result of the underwriting and other changes over the past few years at October 31st as shown on slide seven the 60 plus day delinquency rate of balances originated in the last 15 months was 7.7% compared to 8.1% for the comparable period in the prior year. The underlying portfolio performance is improving. See slide eight for our delinquency data by product category. Consistent with historical performance appliances delivered the best delinquency review while home office products delivered worst. As our product sales mix shifts towards more furniture, mattresses and appliances is expected to benefit our delinquency rates over time. The elimination of tablet, gaming equipment and cameras is helping speed the shift in the product mix. At the end of November the combined home appliances, furniture and mattresses 60 plus day delinquency rate was equivalence to last year’s rate with the higher year-over-year total portfolio 60 plus day delinquency rate being driven by the electronics categories in addition to the slower portfolio growth discussed above. While still higher than a year ago slide nine shows that the existing customer mix trend in origination has flattened out with the new store openings during the quarter. Typically we see an increase in repeat customer transactions during the fourth quarter. Our current expectations for the delinquency rate show improvement on a year-over-year basis during the first quarter of fiscal 2017 depending on portfolio growth rates. Looking at net charge-off performance the rate for the quarter was higher than the prior year due largely to the change in our recovery process as we completed our last sale of charged-off accounts in the third quarter last year and was also impacted by the slower portfolio growth this year. We remained focused on delivering outstanding value and a great experience to our customers by continuing to improve execution in our retail and credit operations. Now, I’ll turn the call over to Tom Moran. Tom?

Thanks Mike. Adjusted diluted earnings for the three months ended on October 31, 2015 were $0.02 per share is excluded net charges of $3.9 million or $0.09 per diluted share on an after tax basis from legal and professional fees related to the exploration of strategic alternatives, securities related litigation and loss on extinguishment of debt. For the retail segment of the business total revenues for the third quarter of fiscal 2016 were $323.1 million, which was an increase of $17.9 million or 5.9% versus the same quarter a year ago. This growth reflects the impact of a net addition of six stores versus last year with same flat store sales including the impact of exhibit product categories. Retail gross margins improved by 90 basis points versus the prior year to 41.5%. The majority of this improvement was driven by the 70 basis points increase in product gross margin. A secondary driver was the impact of repair service agreements, which benefited from higher retro or back-end payments as well as higher average selling price on the front end due to mix. Slide 10 of the earnings presentation shows retail cost and expenses, starting with the top row we show that cost of goods imparts including warehousing and occupancy cost leveraged by 90 basis points as a percent of total retail revenue declining to 58.3%. This improvement resulted primarily from the drivers as we just discussed for retail gross margins. Delivery, transportation and handling costs deleveraged by 20 basis points to 4.5% due to a greater impact from new stores in markets not yet fully built out versus last year and by higher cost stemming from the shift in product sales to mix to furniture and mattresses a higher proportion of these are delivered to our customers then with other product categories. These higher cost impacts were partly offset by efficiencies in delivery operations resulting from distribution centers we opened during Q3 of last year. Retail SG&A excluding delivery cost was 25.2% for the quarter compared to 24% for the same period a year ago. The 120 basis points increase was driven by the impact of new store openings, which drove a 60 basis point increase in occupancy as well as a 50 basis point impact on compensation and benefits and finally contributed to the 50 basis points increase in advertising. The other SG&A expense category was favorable due to a gain on sale of real estate and a decrease in certain professional fees and employee related expenses when compared to last year. During the quarter we recognized $2.5 million in expenses relating to store closing cost as well as the class action lawsuit. This compares to a prior year total of 350,000 associated with facility closures and legal fees. Taking a look at the credit segment, finance charges and other revenues were $72.2 million for Q3 of fiscal 2016, which was up $7.3 million or 11.2% versus Q3 of last year. This was driven by a 21.6% increase in the average balance of the portfolio, partly offset by a decline in the interest income and fee yield. Drivers of this decline included, first, the introduction of 18 and 24 month equal payment, no-interest finance programs beginning on October of 2014 to certain higher credit quality borrowers. Second, there was a higher provision for uncollectible interest. And, third, the impact of our discontinuation of charging customers certain payment fees. SG&A expense in the Credit segment for the quarter grew 23.2% versus the same period last year, driven by the addition of collections personnel to service the increase in the average customer portfolio balance, together with the anticipated near-term portfolio growth. Credit SG&A as a percentage of average total customer portfolio balance, which we use as a key metric, deleveraged slightly by 10 basis points versus last year. While this quarter’s consolidated SG&A delevered we anticipate that fourth quarter in total will be roughly in line with Q4 of last year as a percentage of revenue. Provision for bad debt for the three months ended October 31, 2015 was $58.1 million, which was a decrease of $13.9 million from the same prior year period. The provision for bad debts for the three months ended October 31, 2014 included an adjustment due to expectations for charge-offs occurring at a faster pace than previously anticipated and the decision to pursue collection of past and future charged-off accounts internally rather than selling these accounts to a third party. Key factors in determining the provision for bad debts for the three months ended October 31, 2015 included the following. The 21.6% increase in the average receivable portfolio balance resulting from new store openings over the past 12 months. There was a 15.9% increase in balances originated during the quarter compared to the prior year quarter. The increase of 20 basis points in the percentage of customer accounts receivable balances greater than 60 days delinquent to 10.2% at October 31, 2015 as compared to the prior year period. And finally the balance of customer receivables accounted for as trouble debt restructurings increased to $109.9 million or 7.3% of the portfolio. As a result of these factors the provision for bad debt as a percent of the average portfolio balance was 15.6% compared to 23.6% in the third quarter of last year. Interest expense increased by $10.8 million in Q3 year-over-year, driven largely by our reentering into the ABS market, which increased the average debt balance outstanding and contributed to an increase in the effective interest rate. We viewed the higher borrowing cost associated with our ABS transaction as a temporary cost of reentry into this market. As we’ve mentioned in the past, this will give us a diversified capital structure to support the growth of our business and enhance long-term shareholder value through our ability to execute share repurchases. Our expectation is that as we become a repeat ABS issuer within a establish performance record, our borrowing cost in these transactions will improve in the future as they have for other companies that have accessed this market. Turning now to balance sheet and liquidity. Inventory was up 41.3% to last year primarily due to our strategy to increase in stock levels to support holiday sales. As of October 31st, 59% of our $238.2 million in inventory was financed with outstanding accounts payable. Our debt as of the end of the quarter totaled $1.2 billion, which included $934 million of ABS notes and $227 million of high yield notes. We had no drawn balances on our revolving credit facility. Looking at slide 11, our liquidity and capital flexibility has improved substantially following the recent ABS transaction. The amendment and expansion of our ABL facility and amendment of our high yield notes. As of the end of the second quarter, our capacity totaled $322 million. As of the end of the third quarter this had increased to $918 million, including $109 million in cash. We expect to launch and complete our next ABS offering during the first three months of 2016. We wanted to give an update on our repurchase program, as Norm mentioned year-to-date through yesterday we have repurchased 5.2 million shares of common stock for a total $132 million. We have also repurchased $23 million of fixed value of senior notes. As we’ve mentioned in the past the share repurchase program underscores the confidence we have in our long-term growth prospects and is consistent with our overall commitment to generate enhanced long-term shareholder value. Operator this concludes our prepared comments and we are now ready to take questions.

[Operator Instructions]. Our first question comes from the line of Peter Keith with Piper Jaffray. Your line is open.

Great, thanks a lot guys, good morning. This is actually John on for Peter. I know you mentioned I think on the call here that your sales trends in oil impacted market stabilized in Q3, could you maybe talk a little bit about delinquency or re-aging trends in those markets given the increase in re-aging overall in the quarter? And then I guess overall have you just seen a material change in any of those trends specifically within oil impacted markets?

Sure, John this is Norm. It’s really hard to predict what the future holds, but right now what we are seeing from a credit standpoint is really not much of a fact there from a business standpoint. Really where this would be driven from is from an employment standpoint as oppose to anything else. And we’re monitoring closely the employment trends in all of the oil producing markets. But at least at this point we have not seen any material impact from a delinquency or credit standpoint.

Okay. And then I guess just looking at your monthly trends here throughout the year obviously had a really nice comp in November, but it looks like the appliance category I guess was down for the second straight month, which was contrary to what you guys had run up through September. So I guess is there anything going on with that appliance category in October and November that you would like to call out?

We are seeing some more promotional activity in the opening price point within the appliance category that we typically do not carry it’s driving a significant portion of growth at the other retailers. These products don’t really provide us the sufficient gross margin to work effectively within our business model. There has been activity in price points in the $400 to $600 range as well, which we have increased our FAUs and our presence within that -- within those categories as well and we are very committed to maintaining our market share within the appliance category.

Okay. And then just one last quick one if I can, on looking at your 60 day delinquency rate you saw a nice narrowing here in November to only 10 basis points above where you were last year, as we look at December and January now do you think it’s possible that you can cross over that 9.7% rate you saw in the last two months of fiscal year ‘15?

As Mike had mentioned in his comments part of the struggle has been the slower portfolio growth than what we had expected. We would have seen already a crossover improvement had we had the similar portfolio growth that we had last year. So having said that the underlying performance continues to improve and at the latest we would expect it to cross over if not at the sometime here in the fourth quarter very early in fiscal year 2017.

Great, thanks a lot guys. Good luck on the fourth quarter.

Thanks, John.

Thanks, John.

Thank you. Our next question comes from the line of John Baugh with Stifel. Your line is open. John A. Baugh: Thank you for taking my questions. The first question I had was on the fourth quarter comp you had indicated obviously exiting the product categories was about a 6 point drag. So I’m curious what your expectations would be, say for TVs and appliances and furniture to counter that?

John, what I would say is I mean the categories that we exited have the biggest impact within the months of December and we recognized that going in. However, having said that we -- as you saw in the month of November our even with that drag our electronics category was up, we still expect our furniture category to continue to perform well and as I mentioned previously on the appliance standpoint we are fighting to maintain our market share there as well. John A. Baugh: Okay. Could you comment on corporate overhead it took a significant job from Q2 to Q3 I think from about a point to 2.3, 230 bps, can you tell us what’s going on there?

This is Tom, a lot of the things that contributed to that were as we are making investments in building out the business. So as we are entering in stores into new markets which are not fully as productive yet our new store openings we haven’t built out our distribution cost, we are not leveraging our marketing cost, and so we saw some impact of that year-over-year. We are also making investments in expansion for the future we’re making some additional investments in IT and in some of the other overhead departments. So that’s why we called out that as we go into Q4 on a percentage of revenues basis we expect that to be more in line with what we had in the prior year. John A. Baugh: Does that number Tom get more inline in future quarters or remains elevated year-over-year in future quarters because obviously you get the benefit of a lot of seasonal sales in Q4?

We would expect it to continue to leverage and our performance to be better from an SG&A standpoint, at least as a percent of revenue standpoint. Having said that next year as we have mentioned we’re accelerating our growth to 20 to 25 new stores starting with three stores in February. That growth is targeted towards markets where in many instances we already have existing stores to be able to leverage that those distribution and marketing cost. But having said that we will have to continue to invest as we expand from a growth standpoint, but at least through -- from an infrastructure standpoint, but least through the early part of fiscal year ‘17 we would expect to be able to leverage some of those investments we’ve already made. John A. Baugh: Okay. And then on the inventory I know I think Mike you commented that obviously it’s financed with payables and you expect it to come quote inline at some point in the future and not impact gross margin I think I heard all that correctly. What is come back inline mean what’s the metric and the timing again on that?

It’s early next year January, February, March kind of timeframe and really tracking the revenue growth.

Proportionate to the growth, proportionate to our growth. John A. Baugh: Okay. And my last question is around the two comments you made. One, I think I heard correctly was a new first payment default credit scoring. I’m not sure I got the second one, but could you maybe give a little color around both of those when they’re going to get implemented precisely and when we start to see the revenue drag from that? And I guess with the lag when we’d expect to see 60 days plus dues benefit from those changes? Thank you.

This is Norm I’ll start and then I’ll hand it over to Mike to give you a little more color. Because I think strategically these are both real important for our long-term growth strategy. And the first is the implementation of the early paid default model that we have already implemented in the month of November within the business. And we’re already working with that early pay default model to improve it and come up with the second generation of that model that we would be rolling out early or mid-part of next year. In addition we’re also relooking at the original underwriting model that we implemented three years ago in 2013 and refreshing that and improving that from a segmentation standpoint that will enable us to underwrite even more effectively not only in taking out and the trick here is leveraging so that we don’t see a significant drag from sales and being able to vary skilfully go in and take out customers from an underwriting standpoint that would not be profitable and not meet our hurdle rate from a return on investment standpoint. So with that Mike can give you -- will give a little bit more specifics.

Now little more color on the two changes we made John. So the early paid default model we really in the work with FICO it was identifying those customers that charged-off after making zero, one or two payments and identifying characteristics that helped us more precisely identify them and make a better underwriting decision. And the second change was didn’t filed customers predominately customers with no FICO score as we’ve gotten more data here the last couple of years we have adjusted our underwriting related to lower income customers in that segment. And we see the impact about a 1.5 to sales that went in in the first half of November. We were actually testing the early pay default model in late October just operationally and then really turned on the first phase of our implementation of that process in the first half of November. So it will impact the majority of the quarter. As far as when you really see it show up in 60 day, it will be several quarters before there is enough origination volume seasoned into the portfolio to really have a meaningful impact on 60-day delinquency. John A. Baugh: Great. Thank you for the answers, good luck.

Thank you.

Thank you.

Thank you. Our next question comes from the line of Brad Thomas with KeyBanc. Your line is open.

Hi, thank you and good morning, thanks for taking my question. I wanted to ask about going to market and doing your next securitization and with the cadence of business where it is today, could you give us your latest thoughts on when you may be back out in the market again? What size deal you might want to go for and maybe what you’re hearing from those who advice you on what the market rates look like right now?

Sure our expectation is that going forward we would become a repeat issuer, we do it on a more frequent basis so the price of the transactions would be smaller in scope than the first one. And so as we mentioned we’re looking to target something over the first couple of months into next year, which would if you look at the pace at which we generate receivables puts us probably somewhere in the $500 million or $600 million range for that. With respect to the market we’re hearing that there are some changes as the spreads are winding a little bit just as we go through holiday, but we don’t expect things to be significantly different early next year. The big things that we think will affect us in the future going forward are the fact that we’re starting to reestablish a track record. The fact that we’ll be focusing on a marketed deal versus bought deal we may consider securing rating agency ratings as we feel that that’s worth it economically. So there will be changes as a result of what we’re doing going forward that we think will anticipate will help us to get better pricing on that going forward. And so that’s -- the important thing for us is to become a repeat issuer in the market and maintain our diversified access to capital with that as well as the asset backed facility and the high yield notes.

Having said that Brad I would say that our expectations as we entered and did the first securitization recognizing that the all in borrowing cost we’re net of 9% range our expectation going forward is that over this next securitization and several others probably into the future so we would see those all-in-borrowing cost come down markedly over the next two to three securitizations.

That’s great. And then if I could just ask a few housekeeping items here, for the fourth quarter could you give us your thoughts on where you think interest expense will come in, what kind of tax rate you’re expecting and what kind of share count you’re expecting for the quarter?

So for the interest expense directionally if you think of the three buckets of what drives our interest and you’ll see the updated components of our debt. We have the outstanding high yield notes balance that’s still out there, the stable rate will be we’ve talked about the ABL that’s undrawn that we’d utilize that if needed. And then finally the ABS debt will continued to be paid down as we collect on those accounts. The balance as of the end of October was the $934 million and you can check the subsequent balances as you look at the servicer reports, but the amount of portfolio to which that higher all-in cost of funds that Norm talked about we’ll be gradually reducing and so that would be a driver of lower interest expense rate in Q4 as you look at that in your model.

Okay. And Tom just sticking with interest expense it would seem like at least directionally it would be bigger in the fourth quarter than what you had in third quarter given that you have a full quarter -- total utilization rate?

That’s correct our total interest expense will be up for the quarter.

Great, great. And then would you hazard to guess on tax rate and share count for the quarter?

Share count you can just see directionally based on the repurchases we’ve had and it’s obviously a weighted average share count, but nothing really beyond what we’ve talked about there and I don’t have a view for you on tax rate as far as any differences versus what’s out there now.

Okay, that’s helpful. And just one last item if I could it looks like the rent to own segment of your sales decreased as a percentage of what you do I think this is the first quarter in a while that had declined anything in particular going on there in your partnership with the rent to own players?

Nothing really worth commentary at the end of the day, it is a little lighter I will say in the fourth quarter we’re seeing that pick back up again. So I think in the quarter it was just slightly down, but nothing materially that we saw that drove that.

Okay, thank you so much.

Thank you. Our next question comes from the line of Brian Nagel with Oppenheimer. Your line is open.

Hi, this is Dan Farrell on Brian Nigel. Just had a question on the previously securitized portfolio and its performance kind of versus your expectations and specifically around I guess the timeframe and the current pay downs that have been received. And then the flow through I guess about $7 million of the residual equity interest, is that something you guys are expecting kind of to receive on a go forward basis? And does it have any impact on your ability or intend to sell the residual interest or the timeframe surrounding that? Thank you.

You bet. So as we mentioned we did get the first payment within our anticipated timeframe within the first two to three months. We do expect to receive another meaningful payment this month related to November results. And because it pays down so quickly at this point as Norm mentioned it’s such a high return asset and amortized quickly for now we’re going to hold on to it and continue to monitor the market for purchase the residuals.

I would say Den what we’re seeing is in essence what we modelled out when we initially did the securitization.

Okay, great thanks.

Thank you.

Thanks.

Thank you. Our next question comes from the line of Rick Nelson with Stephens. Your line is open.

Hey guys this is Nick Zangler in for Rick. I’m just looking at that expectation next quarter for the 13.75% to 14.25% charge-off rate, little bit higher than our expectations. Can you just detail that again and curious if you’re limiting the number of accounts that are being re-aged going forward? Just any potential or fundamental changes going on there.

No fundamental changes. If you look at last year it was 13.1% seasonally, we generally see higher charge-offs in the fourth quarter. And then with the slower portfolio growth that impacting the comparable rate year-over-year and then certainly we’re kind of look like we’re pushing through the last of those originations from early -- our 2013 early 2014.

Okay, right I understand that. And then just regarding the potential residual sale here, looking to future securitizations I know at one point you guys have suggested that during the announcement of the new securitization you’d hope that to sell the residual equity along with it at the same time. Is that expectation still out there for the go forward securitizations or has that thought process changed as we have progressed here?

No our thought process hasn’t changed, but what I would say is ultimately that’s the point that we believe that we will get to is to be able to sell the residual at the same time as we do the securitization, the ABS transaction, but it won’t be for this next transaction it maybe a couple down the road part of it we need investors to see the performance of the portfolio, the performance that occurs. And then from a pricing standpoint we would expect it to be in a much tighter range and to be at a point that from a return -- from a shareholder standpoint would make sense for us to do at all in one transaction, that’s certainly is still our ultimate objective.

Got it, alright thank you guys. Much appreciated, have a good one.

Thank you.

Thank you. And our next question comes from the line of David Magee with SunTrust. Your line is open.

Hi, everybody.

Hi, David.

As the inventory repositioning that you did earlier this year, which is a good thing obviously for several reasons. But does that put you at a disadvantage around the holiday time? I know November doesn’t seem to indicate that, but I’m just curious as you get closer to Christmas as not having the smaller electronic stuff put you at a disadvantage.

Are you meaning from -- I’m assuming you’re meaning from a traffic standpoint, obviously from a product standpoint when you look at what those margins were at the end of the day even though the volume was significant, more significant in the fourth quarter the margins at those products were sold at still create a downward pressure from an overall retail gross margin standpoint. It could have arguably an impact from a traffic or a sales standpoint, but we feel confident with the promotions that we have in place and what we’re doing within the other categories from a TV standpoint and from a furniture standpoint and certainly what we’ve seen in November to this point we’ve been very pleased with attractive the traffic that we are seeing in our stores so believe it’s having minimal if any impact.

Okay, good. And then at this point just given that the stores and the oil impacted areas seem to be stabilize and do you think that that do you have any visibility to how that sort of plays out in the first half of next year? Do you think it stays stable?

We hope it does, I mean we’ve seen a softness for the oil markets for several months versus our other market. However in the month of November as Mike mentioned it stabilized and we didn’t see further deterioration and obviously we continuing to monitor and watch it very closely both from a sales standpoint as well as a credit and delinquency standpoint to be able to respond or react if we need to.

Are you doing anything different at this point with regard to promotions in those markets?

We are not.

Okay. And then just lastly the impact of the change in the recovery process I guess for the troubled assets, the impact on the provision in the third quarter, how does that play out over the next couple of quarters? Does that impact stay the same, does it begin to lessen?

As far as a provision standpoint and a charge-off standpoint it’s really baked into what you are seeing now. It was really a onetime adjustment that occurred when we made that change a year ago and we would continue to expect over time actually for recovery cash flows to continue to build as we have more and more charged-off accounts to work.

It’s really not an underlying impact to the portfolio; it’s really just a change in timing of when you receive recoveries at the end of the day.

But now are you sort of comparing more apples-to-apples to with how you did it last year?

Yes, fourth quarter only the apples-to-apples you are right.

Okay. Great, thanks guys and good luck.

Thanks, David.

Thank you.

Thank you. And I am showing no further questions at this time. I’d like to turn the call back over to Mr. Miller for closing remarks.

Thank you. In closing, I would like to thank our nearly 5,000 associates for their support and dedication to delivering an outstanding experience to our customers. I have been on the job now for about 85 days and I am truly excited about the many opportunities that lie ahead of us. I am committed to ensuring transparency both within our organization and with our shareholders. We have a time tested business model and I look forward to leading the organization as we work to build on our past successes to deliver value to our shareholders. Have a great day.

Ladies and gentlemen thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone have a wonderful day.